Skip to comments.Citi: Don't Worry Consumers, Inflation Is Only Affecting Things You Buy Every Day
Posted on 05/16/2011 7:33:47 AM PDT by blam
Citi: Don't Worry Consumers, Inflation Is Only Affecting Things You Buy Every Day
May 16, 2011, 8:26 AM
U.S. consumers are under the impression that inflation is actually much worse than it is, according to Citi's Robert DiClemente.
DiClemente points to the fact that prices are rising sharply, but for only 30% of the consumer price index basket. Unfortunately, that happens to be the part of their basket consumers buy regularly, so it's having a large psychological impact.
From Robert DiClemente:
Nonetheless, popular perceptions have been skewed by the fact that consumers buy food and energy so often. It seems prices of goods and services that consumers buy every month have been skyrocketing. At the same time, prices of other items consumers buy sporadically but are nonetheless important parts of the basket, including big-ticket purchases like cars and computers, have been relatively tame. The same can be said for items purchased on fixed contracts, such as auto leases, rents, and insurance.
Following research by Statistics Canada, we segmented the US CPI by the frequency of purchases and found that the entire swing up in measured inflation has occurred in the 30% of the CPI that consumers buy regularly. Together, prices of these items have increased by about 7% in the past year, while prices of the rest have risen by 1.4% (Figure 1). Importantly, the frequently purchased price index bears little resemblance to the path of underlying inflation. Price swings of these items are extremely volatile and often give misleading signals of the trend in inflation.
(Excerpt) Read more at businessinsider.com ...
They changed the way “inflation” is calculated under Clinton and because of this Citi is right ..the stuff like food and gas just don’t count anymore..so relax the masters have it all under control...there is very little inflation ( unless you eat and drive of course)
But we can still eat better iPads for the same price.
OK, where’s the FReeper that vehemently denies that food and energy are left out of the CPI?
There you go. We actually have more money than we think we have. If we quit spending money on the 30% of the market basket that costs more all will be well. Citi says that instead of spending on silly things like food, gas and shelter we should all go buy a car, preferably an Obama-approved electric car and we won’t feel inflation at all. We’re all wrong to worry. I feel so much better, don’t you?
Damned peasantry! Why don’t they eat cake.
"Economic recovery? What economic recovery? Contrary to popular media reports, government economic reporting specialist and ShadowStats Editor John Williams reads between the government-economic-data lines. "The U.S. is really in the worst condition of any major economy or country in the world," he says. In this exclusive interview with The Gold Report, John concludes the nation is in the midst of a multiple-dip recession and headed for hyperinflation. "
The Department of Labor calculates both the "core" inflation rate without food and energy, and the total inflation rate with everything. Now whether the core or the total rate is publicized depends on which number the press wants to pump up.
For example the Social Security cost of living adjustment is based to the total inflation rate, so the run up of fuel cost in the third quarter (when the COLA is calculated) of 2008 caused a high adjustment in January 2009. But the subsequent crash in costs (greater than $4 per gallon in July 2008 down to $1.419 Christmas 2008 for me) meant that the following two years wouldn't have a COLA. If they used the "core" inflation rate there wouldn't have been a large 2009 COLA.
The prices of Beluga and housecleaning by illegal aliens are stable.
Basically, if I stop eating and driving a car, I won’t see any inflation.
Useful info ...
A drive to the grocery store (Gasoline at 3.95 per gallon), and a walk through (Chicken at $4.99 a lb.) should scare the pee out of anyone.
I’d like to see inflation basket calculated for someone who makes less than 50K a year based on the proportions of things they actually purchase over a years time.
“Price inceases on April 4th at the LDS canneries show inflation up between 11 and 49% for many basic food staples. These rise in prices are a strong barometer for the overall economy since the LDS facilities are usually the last to raise prices for their communities, which provides food in bulk that they can collect through their vast networking operations.
According to the new price list from April 4th, many food staples have increased by more than 20% since the last price list came out just 3 months ago on January 3rd.”
If you are thinking of the same person I am, he got the zot.
One might wonder whether the voice in the midst of the four beasts that St. John the Theologian heard wasn’t actually crying something to the effect of “a quart of wheat for a day’s wages. . . but hurt not the iPads and smartphones”, which made no sense to St. John, so, divinely inspired, he picked a couple of luxury goods familiar to his proximate readers, oil and wine, to include in his Apocalypse.
Yes, they are in there, but the big question is, "how are they weighted?"
I suspect the top government economists in charge took a clue from the Climategate people, as to HOW to
cook calculate the numbers.
You'd think I bought a computer/week, if not more often, they way I get almost daily ads for them from HP & Tiger-Direct.